Credit Union Cyber Security Differentiate Your Credit Union with a Differentiated  Card Payments Strategy


Differentiate Your Credit Union with a Differentiated  Card Payments Strategy

credit card strategyToday, consumers have access to more ways than ever to pay for goods and services. Whether it's convenient Buy Now Pay Later (BNPL), Cash App, Venmo, PayPal, or embedded payments—they all represent easier, frictionless payment methods for consumers. But that's not all they share in common: they all pale in comparison to the popularity of credit and debit card solutions.

Simply put, card transactions are still a popular payment method. Because of this, it makes dollars and sense for your credit union to make every concerted effort in revamping and rejuvenating its card strategy. Let's take a closer look at a few ways credit unions can create a differentiated credit and debit card strategy to stand out in a crowded market.

Bad Credit Represents Good Opportunities for Credit Unions

The majority of credit card offers require the individual to have relatively good to excellent credit scores. Yet, this leaves a large swath of the population on the outside looking in. According to Experian's 2019 Consumer Credit Review, a staggering 16% of Americans have extremely poor credit, which is a FICO score between 300 and 579. At the same time, an additional 18% of consumers have what is considered to be "fair" credit, which represents a score between 580 and 669. As you can see by the numbers, there around 38% of consumers on the outside of the credit card world looking in. And your credit union can open the door!

Credit unions that offer a tailored secured credit card can help those with no credit, bad credit, or a limited financial history to establish a strong credit score--without the risk that traditionally is associated with lending to certain profiles. With a secured credit card, the member will put down a security deposit, which usually determines the limit. After the member completes a certain number of on-time payments, they can establish a positive payment history, which can strengthen their credit score.

Secured cards represent a direct opportunity for your credit union to create an unsecured credit card relationship. You can tailor your secured credit card to offer many of the same rewards and perks as some of the popular unsecured cards. You can also completely integrate the secured card into your infrastructure and allow members to gain a more holistic view of their financial health from a single dashboard and/or mobile app.

By offering a secured credit card, you will not only best serve an underserved demographic, but you can also build member loyalty. You'll be offering an in-demand product—when other institutions wouldn't—while deepening relationships past the traditional checking and savings account.

Make Small Business Credit Cards Your Credit Union's Business

Small businesses are the heartbeat of the American economy. Whether it's the local mom-and-pop store or a burgeoning factory, these small businesses represent 44% of economic activity in the U.S. and 43.5% of gross domestic product—according to the Small Business Administration. Even so, small businesses are often overlooked when it comes to offering tailored credit card solutions.

Previously, only the largest financial institutions offered small businesses credit cards, leaving those business owners with few to no options. Today, however, your credit union has the unique opportunity to meet the credit and lending needs of small business owners throughout your coverage map. In doing so, you can encourage greater loyalty and establish an ongoing conversation with business owners.

Elevate & Integrate Your Credit Union's Credit Card Payment Experience

While diversifying your card offering is one step, it's even more important to offer a seamless member experience. In fact, integrations and technology are what keep your credit union competitive in a quickly changing financial services industry. For instance, consider providing a seamless and integrated card payment experience for your members. And this experience can take many shapes.

It could mean that you allow credit union members to make card payments over the phone or in the branch on loan payments. It could also translate into allowing the use of cards for account funding and making collections payments. In the process of offering a more seamless credit card and payment experience, it can create new efficiencies for your credit union every step of the way while optimizing the member experience.

Don't Forget the Importance of Credit Card Security

In an era of contactless, digital wallets, enhanced security measures should be deeply baked into every fiber of your credit union. A robust security protocol is a benchmark for building member loyalty and brand equity. Simply put, your members should have confidence in the security of your credit union and card offerings without having to actively worry about data breaches. And how is this sentiment built? With proactive card security measures and systems that help protect their identity while preventing unauthorized access. A few top card security measures your credit union should have in place include:

  • PCI-DSS Level 1-certified payment processing is the highest compliance level established to protect the security of cardholder data and credit card data in in-store and e-commerce transactions.
  • Remote controls for credit cards allow members to easily control the status of their cards through your mobile app. You can help eliminate fraud by placing control in the hands of your members.
  • Implement Secure Europay, Mastercard, and Visa (EMV) chip card transaction technology where cardholder data is stored on a metallic chip instead of a magnetic stripe. EMV chip cards can only be authenticated by special readers, which makes them more secure compared to stripe-only cards. One of the core benefits of EMV chip technology is the ability to prevent counterfeit fraud.
  • Encoded personal data through authenticated encryption ensures all card and cardholder data is transmitted with the highest security protocols.
  • Additional active and passive fraud detection and prevention measures.

Create a Differentiated Credit Card Offering & Strategy with FLEX

At FLEX, we are laser-focused on making the member payment experience as seamless as possible. And to achieve this goal, we recently partnered with Beyond, a leading provider in the payments industry. This best-in-class integration offers credit unions the ability to offer members a more seamless experience and differentiate their credit card offering through the FLEX core processing system. Interested in offering your members a safer, easier, and more integrated way to pay for goods and services? Check out our latest expanded eGuide for insightful tips, best practices, and guidance.

Download the FLEX Card Management eBook

Preston Packer

Written By: Preston Packer

Executive Vice President | CMO at FLEX Credit Union Technology
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